The Saigon Times Daily: What is the FTA policy of Korea?
- Dug Gyou Bok: Korea is very active with other countries. We have FTAs with more than 40 countries. Recently we signed FTAs with the United States and European Union which itself consists of a lot of countries. We should promote our country because, as you can see, the import-export rates from ASEAN to Korea and from Korea to ASEAN are too different. In the first case, the rate is around 50% and 10-15% in the latter case. We just wondered why and eventually realised that many Asian people do not recognize AK-FTA yet.
That’s why the Korean government is trying to promote this agreement in other countries and we are doing the same. KOTRA serves as a bridge between Korean exporters and oversees buyers. We are highly competitive in a range of output from traditional manufactured goods to high-tech products. Of course, we are interested in FTA success.
The agreement between Korea and ASEAN members took effect for goods in 2007 and services and investment last year. ASEAN, as the Association of Southeast Asian Nations is often known, comprises 10 countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Someone said Vietnam is the best partner of Korea. Can you explain why?
- Vietnam has a similar culture to Korea’s. They are both based on Confucianism. Vietnam is very diligent, with a fast productivity, and quick to adapt to new systems. That’s why a lot of Korean businessmen want to work with Vietnamese people. That’s why they want to invest here. And in another sense we found that Vietnam’s industry is growing fast and also the rate of general consumption is increasing. So we are looking also at the general Vietnamese market of consumers.
Vietnam’s exports increased 32.5% in the first seven months of 2010, while the average export growth among ASEAN members was about 24% in the same period. And the country’s exports to South Korea grew 16.3% in 2009. Furthermore, the multilateral agreement pushed Vietnam to export more telephone set parts and wood chips, products that have also brought in investments from Korea.
Consequently, Vietnam’s exports to Korea in these sectors grew 98.6 and 600% from January to July 2010 respectively, while traditional goods like seafood, shoes and agricultural products increased stably. And on the other hand, Korean exports to Vietnam increased 35.2% in the first seven months of this year, more than three times higher than its imports from the country during the same period.
And I would like also to say that Yon-Jip Jung, deputy general director for Free Trade Agreement Policy under the South Korean Ministry of Foreign Affairs and Trade, said Vietnam was one of the Korea’s best partners in the Southeast Asian bloc, and for this reason he wanted to improve bilateral trade and investment relationships. That is the reason beyond the recent decision of governments of Korea and Vietnam to launch a joint committee to study the possibility of an FTA.
An FTA between Korea and ASEAN went into effect in June 2007, but a bilateral trade deal is expected to provide a higher level of market liberalization for trade between the two countries. Just to give an example of the importance of your country, Vietnam was Korea’s tenth largest export destination as of last year at over seven billion U.S. dollars.
Do Korean businessmen want to invest in the Vietnamese consumer market only?
- We want to capture the Vietnamese market but also invest here as a production base, because actually Vietnam is the gate to ASEAN countries and can also be the gate to China, which represents another huge market. And Vietnam is also very close to us. In many ways Vietnam is a really promising country to us, but at the same time I think it is very hard to find human resources in HCMC, so Korean businessmen move to other cities like Hanoi or even to Indonesia and in general in countries with more manpower.
What is your view about Korean and Vietnam trade relationships?
- They are stable and quick. Big Korean companies made a lot of investments here, such as Posco. There will be more investments in the future and an increase in the trading of goods and services as well. Korean companies here will use services in order to operate. And later, I reckon, many Vietnamese companies could move and invest in Korea too. A similar thing is happening in Malaysia: many businessmen there decided to invest in Korea. So as you can see, in a few years there can be a sort on integrated-interactive systems of investments, services and trading goods between Korean and Vietnam.
It’s sufficient to see the Korean investments in Vietnam: in 2009 they increased slowly, but in the first half of 2010 the amount was up to US$27 million, 1.8% more than 2009, so that means by the end of this year the total amount of investments will be 3-4 times bigger than in 2009. Why did it happen? It is because the big Korean companies like Posco knew a new FTA between the two countries was coming and they saw all the opportunities of such a liberalization agreement. And the Korean companies are interested in investing in Vietnam also because resent studies show Vietnamese industry is growing in every field.
Are there many Vietnamese in Korea? What do you think about that?
- Many Koreans think Vietnamese people have similar character and that is true. As you can see in this occasion, we get along very well as compared to other countries. That’s why we try to invest more and make more deals with Vietnamese.
Is there any Vietnamese company trying to create or develop a new business? In the food industry for instance?
- There are actually two “Pho 24” stores in Korea which offers the typical Vietnamese noodles. Your noodles are very popular in Korea, my wife is one of your biggest fans.
This is your second visit to Vietnam. You were in Hanoi earlier. What do you think about Vietnam?
- I love Vietnam and it is one of my favourite countries in Asia. But Indonesia is still at the top of the list because I have lived there for three and a half years. But Vietnam could be likely the second.
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